When will fossil fuel reserves be diminished? Shahriar Shafiee, Erkan Topal à School of Engineering and CRC Mining, The University of Queensland, St. Lucia Qld. 4072, Australia article info Article history: Received 8 February 2008 Accepted 14 August 2008 Available online 27 September 2008 Keywords: Worldwide fossil fuel reserve Econometrics model Non-renewable energy depletion time abstract Crude oil, coal and gas are the main resources for world energy supply. The size of fossil fuel reserves and the dilemma that ‘‘when non-renewable energy will be diminished’’ is a fundamental and doubtful question that needs to be answered. This paper presents a new formula for calculating when fossil fuel reserves are likely to be depleted and develops an econometrics model to demonstrate the relationship between fossil fuel reserves and some main variables. The new formula is modified from the Klass model and thus assumes a continuous compound rate and computes fossil fuel reserve depletion times for oil, coal and gas of approximately 35, 107 and 37 years, respectively. This means that coal reserves are available up to 2112, and will be the only fossil fuel remaining after 2042. In the Econometrics model, the main exogenous variables affecting oil, coal and gas reserve trends are their consumption and respective prices between 1980 and 2006. The models for oil and gas reserves unexpectedly show a positive and significant relationship with consumption, while presenting a negative and significant relationship with price. The econometrics model for coal reserves, however, expectedly illustrates a negative and significant relationship with consumption and a positive and significant relationship with price. Consequently, huge reserves of coal and low-level coal prices in comparison to oil and gas make coal one of the main energy substitutions for oil and gas in the future, under the assumption of coal as a clean energy source. & 2008 Elsevier Ltd. All rights reserved. 1. Introduction Fossil fuels play a crucial role in the world energy market. ‘‘The world’s energy market worth around 1.5 trillion dollars is still dominated by fossil fuels’’ (Goldemberg, 2006). The World Energy Outlook (WEO) 2007 claims that energy generated from fossil fuels will remain the major source and is still expected to meet about 84% of energy demand in 2030. There is worldwide research into other reliable energy resources to replace fossil fuel, as they diminish; this is mainly being driven due to the uncertainty surrounding the future supply of fossil fuels. It is expected, however, that the global energy market will continue to depend on fossil fuels for at least the next few decades. ‘‘World oil resources are judged to be sufficient to meet the projected growth in demand until 2030, with output becoming more concentrated in Organization of Petroleum Exporting Countries (Chedid et al., 2007) on the assumption that the necessary investment is forthcoming’’ (IEA, 2007b). According to WEO 2007 oil and gas supplies are estimated to escalate from 36 million barrels per day in 2006 to 46 million barrels per day in 2015, reaching 61 million barrels per day by 2030. In addition, oil and gas reserves are forecast at about 1300 billion barrels and 6100 trillion cubic feet in 2006, respectively (BP, 2007b). The World Energy Council (WEC) in 2007 estimated recoverable coal reserves of around 850 billion tonne in 2006 (WEC, 2007). Table 1 shows the distribution of remaining reserves of fossil fuels. All figures are presented in giga tonnes of oil equivalent. Firstly, as seen in Table 1 , coal constitutes approximately 65% of the fossil fuel reserves in the world, with the remaining 35% being oil and gas. Secondly, while the size and location of reserves of oil and gas are limited in the Middle East, coal remains abundant and broadly distributed around the world. ‘‘Economically recoverable reserves of coal are available in more than 70 countries worldwide, and in each major world region’’ (WEC, 2007). In other words, coal reserves are not limited to mainly one location, such as oil and gas in the Middle East. These two geological reasons support the fact that coal reserves have potential to be the dominant fossil fuel in the future. Fossil fuel reserve trends tend to mainly depend on two important parameters: consumption and price. The Energy Information Administration (EIA) has projected that energy consumption will increase at an average rate of 1.1% per annum, from 500 quadrillion Btu in 2006 to 701.6 quadrillion Btu in 2030 (EIA, 2007b). Currently, the growth in world energy consumption is approximately 2% per annum (Mason, 2007). ‘‘In terms of global consumption, crude oil remains the most important primary fuel ARTICLE IN PRESS Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/enpol Energy Policy 0301-4215/$ -see front matter & 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2008.08.016 à Corresponding author. E-mail address: e.topal@uq.edu.au (E. Topal). Energy Policy 37 (2009) 181–189